Payday Loans: Debt Collection

Lord McFall of Alcluith Excerpts

Tuesday 1st July 2014 Lords Chamber

[Lord Newby]

My Lords, there have been recent reports about the Student Loans Company. My right honourable friend David Willetts is in the process of establishing the facts of the practice. The offending letters that the SLC sent out are no longer being sent. Certainly, if it is found that the SLC or any other arm of government has adopted unsatisfactory practices, appropriate and firm action will be taken.

[Lord McFall of Alcluith (Lab)]

My Lords, it is important to note that no fine whatever has been imposed on Wonga. It has been asked only to redress customers at a rate of 8% interest, compared with the 5,853% that it charged its distressed customers. Despite the potential criminality in at least four areas here, Wonga has been allowed to continue as though nothing has happened, portraying itself as the good guy in a bad industry when it is the bad guy in what should be a good industry.

[Lord Newby]

My Lords, I think Wonga is finding it increasingly difficult to portray itself as the good guy. That has been demonstrated by this episode. The key thing to point out is that the action of the FCA has resulted in prompt redress and that 45,000 consumers will be getting a payment from Wonga. Until the FCA had the powers that it assumed in April, there was no provision under the previous regime for the OFT to secure redress for customers in that way. If, under the old regime, the OFT had initiated a criminal process, it is quite likely that it would have taken the best part of three years to reach a conclusion; whereas, under this process, consumers have got money back from Wonga very quickly.